♪ emily: she took ebay from a 30 person startup to multi-billion-dollar powerhouse. then ran a hard, expensive race for california governor and lost. now, meg whitman faces what may be her biggest challenge yet, turning around struggling icon hewlett-packard. her solution, to split the company in two. perhaps the biggest seperation in the history of american business. joining me today on "studio 1.0", hp ceo and chairman, meg whitman. thank you so much for joining us. it is really an honor to be here with you.

so thank you for doing this. meg: you are welcome. i am glad to be here. i am an admirer of your show. emily: thank you. we are at "hp discover." this is your annual tech conference and this is your last "discover" as one hp. is it a little bittersweet? meg: it is a little bittersweet because the company has been together for so many years. but i have confidence that this is the right thing to do because our markets are changing at lightning speeds. it will allow us to be more agile and focused and responsive to customers. it is a landmark, it is a moment in history, but i am really optimistic about the future. emily: what do you think the biggest challenge is going to be of being two separate companies? meg: first is we have to get to being two separate companies. this is an enormous undertaking. this is the biggest separation that has occured, as far as i know, in american business. once we get there, we have to launch the two companies successfully with two new leadership teams, with two new

boards of directors. in many ways, clean sheeting two new fortune 50 companies. i think we are well set up. you never know until you actually get there, but i feel like we have done everything in our power to get this done right. emily: when did you start seeing the split as the right choice? meg: i joined almost 3 1/2 yards to go, almost four in september. the first thing i did was to say we would not spin the pc division. my predecessor had said we should spin pcs, not printers, just pcs. my first decision was if it was a good idea and i decided it was not a good idea was to whether or not that was a good idea, and i decided it was not a good idea. because i thought the company needed to bed down and get organized and have continuity of leadership and get the right strategy and invest in r&d. i look back now, and even if we wanted to, i am not sure we could have pulled off the separation. we embarked on the five-year turnaround journey and made a lot of progress and repaired the balance sheet. i said to the board, late last

spring, i said how do we accelerate the turnaround? after many board meetings, a lot of discussion with the senior leadership team, we said it makes sense to separate the two companies so we can be more focused and agile and have a capital structure that is right for the markets that these two companies will pursue. emily: was it difficult to convince them? difficult to get certain executives or boards on board? meg: it is a journey that you go through. you surface the idea, you talk about it, you run different scenarios. the board was fantastic. the did exactly what boards are supposed to do. they questioned, they asked for more data. it was a very interactive process and we brought everyone along together to the right place. emily: michael dell saw something in taking dell private. others said you could have broken up the company even more. did you consider all the possible scenarios? meg: we considered a lot of different scenarios but we decided we wanted to continue to

be a public company because we wanted our shareholders to get a chance to have shareholder value creation. you might recall the stock price got as low as $11 or $12. we built the company back up and shareholders and the company got to share in that. i think that will happen again here. at least over the longer term. emily: you are going to become the ceo of hewlett-packard enterprise. and i am curious how you came to that decision because it is a more diverse and unpredictable set of businesses. hp inc. plays more to your consumer strength. emily: how did you make that decision? was it like picking a favorite child? meg: part of the decision is who is in what spot and who do you have on the team that can step up? my view was -- dion weisler was an incredibly talented executive. he spent many years in the pc business and learned the print business.

i admire dion a lot. i thought he would be perfect for hp inc. i thought that i love the enterprise business and it has not been what i have done for 25 years, but i now know the business and i love the business and the dynamic nature of it. for management continuity, what ailed hp was too much management turnover. emily: you are going to be chairman of hp inc., how does that work in practice? say hp inc. wants to do a deal with emc or some other company. meg: we did not create these two companies to compete with each other. we created these companies to go after new opportunities that only they can pursue. at least for some period of time we have well-defined swim lanes. hp inc. will be all over 3-d print. all over immersive reality. we will be focused on converged infrastructure, software defined data center, our services businesses, helping customers take ip infrastructure from where it is today to where it has to be.

that is the reason i do not think it makes sense to eat the other company. we should take share from our competitors. emily: have you had moments where you thought i do not know if i can do this? this is hard. meg: it is hard. whenever you come into a turnaround -- and i have done a couple of them -- it is always harder than you think. even though i was on the board, you find out things that you could not see as a board member, so it has been tough as the company had been through a lot. it just takes perseverance. you get up every morning and you fight the good fight and you win the hearts and minds of hp people and restore the confidence of customers and partners. it has been hard but it has been really gratifying. i have to say, relative to running for governor, this is easy.

emily: you mentioned you spend a lot of time with your ceo colleagues. in the last few years, who has been the best council? who has given you good advice? meg: gosh, a number of people. p&g, which is a big customer. a.g. lafley has been a great counselor to me. i sit on the p&g board. jim mcnerney of boeing has been a great counselor. howard schultz at starbucks, he was one of my earliest board members at ebay. emily: what kinds of things have they said? meg: turnarounds are difficult. howard did one at starbucks. i read his book on the turnaround and we compared notes. emily: you mentioned that you would grab a coffee with the ebay ceo, john donahoe, who is going through this. did you grab the coffee and how did it go? meg: has done a great job with ebay and i am proud of john. it turned out that we were splitting these companies at the same time. what are the chances? we compared notes through the process. what was he learning? what was i learning? what could we both do better through a shared experience?

emily: top line revenue has declined year-over-year for the last 15 quarters. when does hp get back to growth? where do you see the growth coming from? ♪

emily: top line revenue has declined year-over-year for the last 15 quarters. when does hp get back to growth? where do you see the growth coming from? meg: we have made progress on this dimension from the high single-digit declines to flat to down 1%. which is not what we aspire to but is such an improvement over four years ago. i would hope that over the next year or two we would be able to demonstrate that revenue growth. we will be two different companies so it will be harder to measure. we have to be able to grow these two companies. you cannot cut your way to greatness. you have to be able to grow.

that is the objective of both companies. but on the hewlett-packard enterprise, we are excited about converged infrastructure and software defined data center and our services business. emily: that is where you see the growth coming from? meg: i do. and our software portfolio. on the hp inc. side, we are excited about 3-d print. is it at its most nascent stage. this could be a big business. we are excited about immersive computing. excited about our core print business. often people say that print is dead. print is not dead. people are not printing at home as much but, i do not know about your office, but everyone is still printing. emily: i am still printing, for sure. it is interesting you mentioned software. we are seeing a lot of companies turning to software to grow their bottom line. apple and ibm are making a huge push into the enterprise. how do you compete with that and what are you doing in the software portfolio at hp? meg: ours is more system software that runs data centers.

emily: you do not see apple and ibm as a competitor? meg: ibm, yes, in many cases. apple a little bit different. apple is more about the devices and they would very much like to go into enterprise, and we obviously need to defend. more on the hp inc. side, but we need to defend. as you migrate, say you are a cio. as you migrate infrastructure into the next generation that will be required for you to be cheaper and faster and more nimble, the ability to write applications in a new environment, cloud native and mobile, it will be important for you to have orchestration, monitoring software. everything has to be automated today. we have those kinds of opportunities in our software portfolio. we play in quite specific areas of software that is a little different than erp systems, like oracle or s.a.p. or salesforce.

this is not our market. emily: what about the cloud? what is the hp strategy for the public cloud? are you going to be a cloud, or sell to the cloud? do you plan to take on amazon and google? emily: our public cloud offering is not designed to compete with azure or aws or google. what we see most enterprises wanting to do is not to put everything in a public cloud. so if you want only convenience, you might go to a public cloud, but if you want security, you want to be in a private cloud. our strategy is hybrid cloud. your cloud, the way that is right for your company and your industry. emily: a lot of deals happening -- avago, broadcom, intel, altera. do you see a segment broadly at hp that could be transformed by m&a? meg: i think you're are seeing an increase in m&a activity as our industry is changing.

every 10 or 15 years in technology i see tectonic plate shifts. web 1.0 to now -- mobility and web services, we are on the cusp of another enormous change and when that happens the industry rearranges itself. we are back in the m&a game now that we have repaired our balance sheet. we will augment our core innovation internally, what we call organic innovation with m&a, but we want to be smart. emily: you mentioned tectonic shifts. do you think we will see more consolidation? meg: i think you will see consolidation which is what happens when industries get disrupted and dislocated. i cannot tell you how that will play out, but i am not entirely surprised at some of the m&a in recent weeks. emily: any sectors you think it will happen? meg: there is two kinds of m&a. one is consolidation of big, existing players. but also all of the new startups that are coming up, that are

either going to go public and be great independent standalone companies or become a part of bigger companies. we need to be watching and thinking about what the right thing for us is in both of those areas. emily: what do you think about valuations? do things seem expensive now? meg: in the startup environment in silicon valley it seems expensive to me, but i will say if you find a company that is completely disruptive and has a chance to take big share, the valuations might be worth it. but we are quite disciplined buyers. we understand that acquisitions for the most part need to be accretive and we have to be responsible to our shareholders. emily: do you consult with marc andreessen? meg: he has been a great counselor to me and the company and he still sits on the hp board and provides a tremendous

perspective. marc and a couple of other board members have fingers on what is going on in the valley. we are fortunate to be there, because we see what is going on. emily: are you glad you took him up on the offer? meg: i am glad. there were a few days when i said, "marc, what were you thinking?" it has been a tremendous experience. i think it matters what happens to these great american icons, what happens to hp in silicon valley, it matters to california. i would argue it matters to the united states and to the world. we have such a big footprint that we matter to communities around the world and that is a responsibility we have to take seriously. emily: we talked about a billion dollars in restructuring costs, $2 billion in the services area. when does cost end and restructuring end? this is a company that has been restructuring for many years, before you got here. meg: we have come a long way to getting the cost structure in

line with our revenue trajectory, but nothing is worse than uncompetitive cost structure because then you do not win deals. you are in a downward cycle. you have a cost structure that is too high, so you do not win deals and you have to keep shrinking. emily: do you think in 2018 it will end? meg: it is hard for me to predict. i think we have the next three years mapped out well but it is a dynamic industry. when industry is changing as fast as ours, it is hard to make predictions. emily: when it comes to jobs, job have been cut, 55,000 jobs. can you give us an idea of how many more there will be, you have said there will be more. meg: it will depend on how these two companies do as separate companies. there will be restructuring costs as we continue to be effective and lean and competitive on the world stage. what i know is that, if we do not get the cost structure right, this will not be the happy ending that we all know it

can be. so we make the tough decisions and we do it in the best possible way that we can. it is the hardest thing that i do as a ceo, but i have to have the good of the company and our customers in mind as we make these decisions. emily: do you see job creation as a part of the strategy? meg: yes, because we are shedding jobs in some places in hiring and others. we are hiring in cloud, security. emily: how much time have you spent with satya nadella? and do you see more opportunities to work closely with microsoft? meg: he has done a wonderful job and we have quite a close relationship with them. it was announced yesterday that we won their 2015 partner of the year award. we are really proud of that. we have a great partnership on the personal systems business and are excited about the launch of windows 10. the partnership between hp and microsoft is as strong as i have seen it since i have been at the company. emily: how much longer do you see yourself doing this?

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emily: do you find it troubling that there are still so few women in silicon valley and especially in leadership positions? meg: i think we can always do better. if i take industry as a whole -- and tech is behind here but my class at princeton had less than 20% women and the same was true at harvard, they are now 50% women. part of this is simply generational. but part of this is making sure that women know that they can have a great career and have a family and do some other things. technology is a little more slow and i would say there are a couple of reasons why. it goes back to we have to get girls interested in science, technology, engineering, and math. emily: is there anything in particular that you have done at hp or before to address these issues? meg: first of all, we really work hard to make sure that we

get a diverse group of entering employees. listen, we just had to build two new boards. we had to make sure that the boards were diverse. and what i will tell you is that unless you work at it it does not happen. emily: what advice do you have in terms of overcoming the toughest obstacles that you faced? meg: first of all, you have to have confidence in yourself. you have to find something you love to do. i lost a well publicized race for governor. really painful, but i picked myself up and dusted myself off and had a chance to run one of the great companies. emily: you have talked about the strong dollar has hurt hp and other businesses that are big abroad. should there be a policy response to this? would hp consider a bond sale? meg: this is far bigger than hp, this is all around the global economy and where people feel safe putting money.

my view is we have to react to the situation. we are not going to be able to influence global currencies. my view is that the dollar is going to remain strong for a bit. i do not know how long, if it goes to parity, or stays where it is, or gives up some ground. when you run a company you have to manage it. emily: would you consider a bond sale? meg: not at this juncture. we will be refinancing the debt of hp when we split into two companies and it is frustrating in many ways because we are on such a great path, and if we had not had this currency we would have flexibility. it is what it is. emily: there is a presidential election happening. former ceo carly fiorina is running. are there candidates you like? meg: there are a lot of good candidates running. we will see how this sorts out. there are a lot of republican candidates, a new one every day. what i would say is we should be

really grateful for people who want to run for public office. we need great candidates, we need a diversity of backgrounds, and i will tell you from personal experience that it is not easy. emily: what is next for you? how long do you see yourself doing this? what would you want to do after hp? meg: i do not know. i have stopped giving sort of forecasts around this and i never dreamed i would run for governor. i also said i probably will never be another ceo. you never know where life will take you, twist and turns. we will see. emily: how much longer do you see yourself doing this? meg: i do not honestly know. i am excited to get the two companies off on a great path and i have made a commitment to hp inc. and hewlett-packard enterprise. i will see this through. i think you know i love a challenge. emily: meg whitman, ceo of hp, thank you so much for joining us, it has been really great to have you. meg: thank you for coming to "hp discover." emily: and good luck. meg: thank you. ♪

♪ emily: his first love was the piano. he spent 10 years on the road, playing keyboard in a rock band, touring in a beat up van. along the way, he met so many musicians without an audience, but he invented a way to bring the audience to them. in 2000, he began the music genome program, a database that aims to predict what you want to hear. you know it as pandora. today, more than 80 million people tune in every month to listen to millions of songs on